Re:The U.S. government’s failed 1890s attempt to forge unity...
by imtringued on Friday June 11, 2021 @06:57PM
(#27479524)
>The wealthy are benefitting from low-interest rate loans (margin accounts, leveraged trading, options) that are enabled by the existence of inflation,
Low interest rate loans exist because of low inflation. If there was high inflation and full employment those rates would go up very quickly.
>Consider someone who is spending 95% of their income on day to day expenses, and we have a 1% increase in prices. Now you are spending 96% of your income on day to day expenses, which is a 20% decrease in margin of safety. It's even worse if you start at 99%.
Your employer also has now room to pay you 1% higher wages.
>"But wages catch up" you say. No they don't. Otherwise inflation as a policy doesn't work.
They do with full employment. Inflation only exists to erode the value of income earned in the past to encourage investment. To make sure those investments pay off, inflation also raises future incomes.
>Inflation is a stealth wage cut, a matter of policy for cheating the labor class. Don't get me wrong, it's well intentioned - it's to prop up the low unemployment metric, but Goodheart's law applies.
It's a hack to get to full employment. Once you have full employment workers can negotiate for increases that catch up with productivity, which today would go well above the current inflation rate.
>Finally, inflation forces the middle class to invest instead of save, to stay afloat and build up a retirement nest egg. Investments typically must go through approved channels, e.g. "the stock market" which disproportionately favors the already wealthy, e.g. CEOs, investment managers, hedge funds.
If the USD in your bank account don't represent wealth in the physical world they are effectively worthless. You're also forgetting that those investments will create jobs and some of those jobs are middle class jobs.
>Thus it is a siphon that steals wealth from the poor and middle class and gives it to the wealthy.
Ok, tell me your magic solution to achieve full employment and letting wages catch up with productivity.
Low interest rate loans exist because of low inflation. If there was high inflation and full employment those rates would go up very quickly.
>Consider someone who is spending 95% of their income on day to day expenses, and we have a 1% increase in prices. Now you are spending 96% of your income on day to day expenses, which is a 20% decrease in margin of safety. It's even worse if you start at 99%.
Your employer also has now room to pay you 1% higher wages.
>"But wages catch up" you say. No they don't. Otherwise inflation as a policy doesn't work.
They do with full employment. Inflation only exists to erode the value of income earned in the past to encourage investment. To make sure those investments pay off, inflation also raises future incomes.
>Inflation is a stealth wage cut, a matter of policy for cheating the labor class. Don't get me wrong, it's well intentioned - it's to prop up the low unemployment metric, but Goodheart's law applies.
It's a hack to get to full employment. Once you have full employment workers can negotiate for increases that catch up with productivity, which today would go well above the current inflation rate.
>Finally, inflation forces the middle class to invest instead of save, to stay afloat and build up a retirement nest egg. Investments typically must go through approved channels, e.g. "the stock market" which disproportionately favors the already wealthy, e.g. CEOs, investment managers, hedge funds.
If the USD in your bank account don't represent wealth in the physical world they are effectively worthless. You're also forgetting that those investments will create jobs and some of those jobs are middle class jobs.
>Thus it is a siphon that steals wealth from the poor and middle class and gives it to the wealthy.
Ok, tell me your magic solution to achieve full employment and letting wages catch up with productivity.